Hundreds of billions of dollars in market value have been wiped off major technology companies across the United States and Asia following a severe stock market sell-off triggered by the US midterm elections, which fuelled concerns over a potential slowdown in artificial intelligence (AI) development.
Technology and AI stocks plunged after Democratic victories in elections marked by campaigns calling for restrictions on AI expansion. The tech-heavy Nasdaq Composite closed down more than 5.5 per cent, shedding an estimated $2.5 trillion (£1.9 trillion) in market value, according to Dow Jones data. Other major US stock indices also suffered heavy losses, marking their worst trading day since 2025, reports BBC.
The massive sell-off came amid broader market concerns over whether the enormous investments in AI technology would generate the expected financial returns.
Global market fallout
In Asia, technology-heavy stock indices fell sharply on Friday morning as shares in semiconductor and hardware manufacturers powering AI experienced steep declines.
Japan’s Nikkei 225 dropped 6 per cent in early trading, dragged down by memory chip manufacturer Kioxia, which lost more than 12.6 per cent, and industry rival Tokyo Electron, which fell 9.5 per cent.
South Korean chipmaker SK Hynix plunged more than 11.5 per cent, while Samsung shares dropped nearly 10 per cent. The sharp sell-off in Seoul pushed the Kospi index down more than 8.5 per cent, triggering a circuit breaker — an emergency mechanism that temporarily halts trading to curb panic selling.
Taiwan’s Taiex index fell more than 8.3 per cent, with semiconductor manufacturing giant TSMC losing nearly 8.5 per cent.
Britney Nguyen, a chips analyst at MarketWatch, described the slump as a “continuation of worries” about overall spending on AI infrastructure.
European equity markets also reflected the downturn on Thursday, with shares in chipmaker Infineon falling more than 8.5 per cent and semiconductor equipment manufacturer ASML dropping 6.5 per cent.
Wall Street rout hits ‘Magnificent Seven’
On Wall Street, companies heavily exposed to AI data centres, including major chipmakers and semiconductor manufacturers, suffered sharp losses on Thursday, highlighting growing investor unease.
Nvidia shares fell more than 9 per cent in New York trading, wiping over $400 billion off the company’s market value.
Other major semiconductor producers also recorded substantial losses. AMD and Micron both fell more than 17 per cent, Intel dropped 10.3 per cent, while memory card maker SanDisk plunged more than 22 per cent.
As a result, the Philadelphia Semiconductor Index, which tracks 30 of the largest companies involved in semiconductor production, fell more than 12 per cent.
Shares in Elon Musk’s companies SpaceX and Tesla also plunged, falling 8 per cent and nearly 11 per cent, respectively. The declines wiped more than $300 billion off their combined market capitalisation on Thursday.
Musk had invested nearly $450 million in support of Republican campaigns, including at least $45 million backing Ken Paxton for the Texas Senate seat. However, Democrats won Texas during Tuesday’s election wave.
Overall, the ‘Magnificent Seven’ technology giants, including Apple, Nvidia and Tesla, lost $1 trillion in market value in a single trading session.
The sell-off also hit broader US market benchmarks. The S&P 500 fell 4.4 per cent by the close of trading, while the Dow Jones Industrial Average erased its Wednesday gains to finish down more than 3.4 per cent.
The Nasdaq Composite’s steep decline pushed it into correction territory, which market analysts define as a fall of at least 10 per cent from a recent high.
Political pushback against data centres
The market turmoil followed aggressive Democratic campaigns across the US to restrict the expansion of AI and data centres, alongside dozens of local ballot measures seeking to limit the development of infrastructure essential to the technology.
Democrats won control of both the US Senate and the House of Representatives in Tuesday’s midterm elections, securing control of Congress for the remainder of President Donald Trump’s presidency.
In Texas, Democratic Governor-elect Gina Hinojosa campaigned strongly against data centre development, pledging a moratorium on new construction across the sector.
In a social media post, President Trump blamed his political opponents for the stock market decline.
“The Stock Market suffered one of the Worst Days in History based on the results of the Election. Remember, it wasn’t Republicans, it was Dumocrats. Do not fear, however, we will soon, one way or the other, be BIGGER AND STRONGER THAN EVER BEFORE. MAKE AMERICA GREAT AGAIN!” he wrote.
Democratic lawmakers, meanwhile, argued that the AI sector had expanded without adequate safeguards and pledged to use their new congressional majority to impose stricter oversight.
Democratic Senator Bernie Sanders wrote on X on Thursday: “Americans don’t want Big Tech oligarchs wrecking the environment, gutting jobs and threatening humanity’s future. NATIONAL DATA CENTER MORATORIUM NOW.”
Analysts and industry leaders react
Susannah Streeter, chief investment strategist at Wealth Club, said the sharp sell-off across the Nasdaq and S&P 500 was sending shockwaves through global markets.
“Fresh panic over the AI trade has hit Wall Street hard. Fears that the vast sums poured into AI infrastructure may not deliver the returns investors have been banking on are now colliding with the prospect of a sharp slowdown in data centre construction,” she said.
Charu Chanana, chief investment strategist at Saxo, warned that increased scrutiny of data centre approvals, environmental impacts and power consumption could delay projects and increase costs across the industry.
She added that although both major political parties supported maintaining US technological leadership, “there is a difference between supporting AI development and allowing infrastructure to expand at any cost or pace”.
Technology executives also acknowledged that they had been caught off guard by the political resistance to data centres during the midterm elections.
Speaking at the WSJ Tech conference in Napa, California, on Wednesday evening, OpenAI President and co-founder Greg Brockman said he was surprised by the community reaction and stressed the importance of engaging with local residents.
“A lot of our shift over the course of this year has really been to realise that from San Francisco trying to build infrastructure in Texas, Georgia, and other places, you can’t just tweet and say: ‘This is going to be good.’ You need to be in those communities,” he said.
At the same event, Meta President Dina Powell McCormick said technology companies needed to step up their outreach efforts.
“I think we need to double and triple down on telling the story,” she said.
Alongside the political fallout from the US midterm elections, concerns are mounting among investors that AI stocks may be caught in a market bubble that could lead to a broader correction.
